Oerlikon to Expand Plane Coatings in U.S. Without Sulzer Tie-Up

July 10 (Bloomberg) -- OC Oerlikon Corp. and Sulzer AG,
which both have Viktor Vekselberg as their largest shareholder,
are making independent forays into metal coatings for airplane
parts, the head of Oerlikon’s coating business said.

Oerlikon, based in Pfaeffikon, near Zurich, is looking to
build facilities in Asia and the U.S. to be near to Airbus SAS
and Boeing Co. suppliers as it promotes its own range of
physical vapour deposition or PVD coatings for landing gear and
other parts, Hans Braendle said in a telephone interview.

The Swiss company has pledged to pump “substantial” funds
into expanding an aerospace-coatings business, matching the
expansion plans of Sulzer located 31 miles away across Zurich.
While Vekselberg’s Renova investment vehicle has said that
cooperation between the companies is conceivable, Oerlikon is
looking to go it alone, Braendle said. Japan’s IHI Corp. snapped
up Swiss PVD-coatings maker Ionbond last year.

The two operations are complimentary so far, “so theres no
need” for a tie up, Braendle said.

Sulzer, which is 31 percent owned by Vekselberg, is putting
above average research funding into its Metco coatings unit
compared to the group, said divisional head Cesar Montenegro in
an April 9 interview.

Airbus Parts

Airbus, owned by European Aeronautic, Defence & Space Co.,
is phasing out the use of hard chromium coatings in exchange for
lighter, more environmentally-friendly PVD sprays which are 50
times thinner than a human hair and harder than steel, Braendle
said. The coatings are used on fasteners for flaps or rudders,
and in critical parts of the landing gear, he said.

“France is the starting point: we are targeting Asia,
China and also the U.S,” Braendle said, adding that Oerlikon
will soon announce a new coating center in the Wichita area.

The investments show how Oerlikon is trying to build out
its most profitable unit after a restructuring which included
selling a lower-margin textile machinery unit for $495 million.

“One of the reasons Oerlikon is looking at aerospace is
because it’s a market with above average margins,” Braendle
said.

A possible merger of Sulzer and Oerlikon, or of their
coating units, has been the subject of industry speculation
since Russian billionaire Vekselberg, the world’s 53rd-richest
man, started investing in both manufacturers through his Renova
group of companies. Spokespeople for Renova, Sulzer, and
Oerlikon declined to comment on speculation about a merger.

Sulzer’s Metco coatings unit had sales of 690 million
francs ($712 million) last year while Oerlikon’s coating unit
had sales of 501 million francs. Renova owns 48 percent of
Oerlikon and 31 percent of Sulzer. Renova has also made a
takeover offer for Schmolz + Bickenbach AG, a Swiss steelmaker.

“These kinds of decisions have nothing to do with
investors or shareholders but are purely driven by the demands
and the business rationale of the unit,” Oerlikon spokesman
Burkhard Boendel said.